December 9, 2019

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Fall Season Results in California Coastal Commission Victories

This Fall, the California Coastal Commission (“Commission”) was handed down two significant victories, further cementing its authority and jurisdiction within California coastal zones. These cases demonstrate that, in certain instances, compliance with the California Environmental Quality Act (Pub. Res. Code §§ 21000 et seq.) (“CEQA”) and local regulations may not be enough to secure development rights for either private developers or local governments.

The California Coastal Act (Pub. Res. Code §§ 30000 et seq.) (the “Act”) is a “comprehensive scheme to govern land use planning for the entire coastal zone of California.”[1] The Act provides coastal resources planning and management policies aimed at protecting oceanfront land suitable for recreational uses and ensuring public access by precluding development from interfering with such uses. To further these goals, the Act authorizes the Commission to maximize public access to the coast while balancing private property rights.[2] Among other things, the Act requires property owners within the delineated “Coastal Zone” to obtain Commission approval, including certification of certain entitlements and issuance of a Coastal Development Permit (“CDP”), prior to any onsite development of their properties.[3]

Petitioners Must Comply with Administrative Exhaustion Requirement In Order to Sustain A Takings Challenge

In Greene v. Cal. Coastal Comm’n (2019) ___ Cal.App.5th ____ (Case No. B293301), the Second District Court of Appeal addressed residents’ challenge to the Commission’s CDP conditions for the remodel of their beachside residence. The specific condition at issue required construction of the residence to be setback five feet from the seaward property line. The residents – Mark and Bella Greene – argued that the Commission erred in finding that a five-foot buffer was needed to safeguard the public’s access to the beach and associated walkway. The Greenes also contended that this five-foot setback requirement constituted an unconstitutional taking of their property.

In affirming the trial court’s ruling in favor of the Commission, the Court made clear the strict application and consequences of administrative exhaustion requirements and found that the Greenes’ general objections at the CDP hearing, which “articulated the principles” of the Nollan and Dolan cases, failed to identify the specific takings challenge. Thus, the Court concluded that the Greenes effectively waived their right to purse this argument in court. Under the Act, a takings challenge is barred if an applicant fails to specifically assert its exact claim during the prior administrative process before the Commission.

This California-centric decision is a severe reminder to private property owners to pursue all potential arguments during the administrative proceedings. It also presents an interesting interplay with the recently decided U.S. Supreme Court decision in Knick v. Township of Scott (2019) 588 U.S. ___. (See prior post on Knick.) In Knick, the Supreme Court authorized property owners to bypass state courts and file a Fifth Amendment takings claim in federal court. Thus, had the Greenes brought their takings claim in federal court, it is possible the outcome of their petition could have been much different. With the uptick in federal takings cases following Knick, a Commission-related takings question may be answered sooner than anticipated.

Background

The remodel proposed by the Greenes included reinforcement to their existing duplex structure for earthquake safety, expansion of the size of their home by 1,190 square feet and the addition of a short staircase and chair glide to accommodate the couple’s mobility difficulties. These plans required no zoning variances and did not affect the City of Los Angeles’s (“L.A.”) plan to construct a boardwalk between the home and the sea. While the Greenes’ property abutted “Ocean Front Walk,” the designated location for L.A’s public walkway on the beach, no such walkway existed in front of the Greenes’ property. L.A. approved the plans and the Greenes applied to the Commission, which has dual jurisdiction[4] in L.A.’s coastal zone, for the requisite CDP.

The Commission approved the CDP, but implemented a condition requiring the five-foot setback from the Greenes’ property line, which would require the Greenes to construct a smaller buildout of their property. As a rationale, the Commission made findings that the proposed 1.5-foot setback would be insufficient to avoid interference with the public’s use of Ocean Front Walk and the homeowners’ maintenance of the residence without encroachment onto public property. The Commission also cited concern with sea-level rise as justification for the increased setback.

The Court’s finding that the Greenes’ takings claim was waived because they did not raise the “exact issue” before the Commission was based on fundamental, and well-established administrative law principles. Under these principles, which are binding on all courts, administrative remedies must be exhausted prior to the initiation of litigation.  The rationale for this rule is that an agency is entitled to learn the opposition’s contentions before resorting to litigation in order to have the opportunity to address and remediate such contentions, potentially rendering litigation unnecessary.  To satisfy this requirement, an interested party must present the “exact issue” to the agency in order to later assert such claim during litigation.  General objections, generalized references, or unelaborated comments, such as those provided by the Greenes and its consultants, do not satisfy this burden.  Here, the Court held that the Greenes’ generalized arguments, which did not refer to the federal or state constitutions, case law or other authority on takings claims, did not provide the Commission the opportunity to address and remediate the issue. Therefore, the Greenes were prohibited from raising these contentions for the first time during litigation.

As to the Greenes’ argument that the Commission-required setback was not necessary to protect public access, the Court determined that, while the risk of sea-level rise did not provide substantial evidence to support the imposition of the five-foot setback, the potential impacts to public access did and, therefore, justified the inclusion of the increased setback requirement.

“But I Didn’t Know” Cannot Save Petitioner’s Action Asserting a Challenge to Commission Decision When Failure to Name Project Applicant is Not the Product of “Genuine Ignorance”

In a case that had a bit of everything, the Fourth District Court of Appeal rejected a number of challenges to the Commission’s certification of a port master plan amendment (“Amendment”) authorizing the expansion of the San Diego Convention Center and adjacent Hilton San Diego Bayfront Hotel (collectively, the “Project”). Specifically, in San Diego Navy Broadway Complex Coal. v. Cal. Coastal Comm’n (2019) ____ Cal.App.5th ___ (D072568), the Court held the petitioner’s suit was timed-barred by the Act’s applicable 60-day statute of limitations, and that, regardless, its substantive Act and CEQA claims lacked merit.

The 68-page decision addressed complex litigation and legal issues, but, ultimately, the lawsuit was rendered untimely by its failure to name the Project applicants as parties to the litigation. Under Public Resources Code section 30801, an aggrieved party has 60 days to challenge a decision of the Commission. Here, the Court determined the operative date was the Commission’s 2013 certification of the Amendment, and not, as the San Diego Navy Broadway Complex Coalition (“Coalition”) argued on appeal, the San Diego Unified Port District’s (“Port”) 2015 adoption of the Amendment.

Per the Court, the case law is clear – a developer is an indispensable party to a lawsuit challenging its project, and must be joined within the applicable statute of limitations period for the action to proceed. Because Project applicants (the City of San Diego (“City”) and One Park Boulevard, LLC (“One Park”) were indispensable parties, the Coalition was required to name them in the original complaint against the Commission’s certification (the action being challenged). The February 2015 Amendment to the Coalition’s 2013 complaint after the 60-day deadline had passed could be deemed timely only if the Coalition was genuinely ignorant of the City and One Park’s involvement in the Project. While the trial court found such genuine ignorance, the Court of Appeal determined this finding was contradicted by the record. For example, in its 2013 petition, the Coalition expressly referenced the Amendment’s environmental impact report and other documents, all of which identified the City and One Park as the Project applicants. Moreover, members of or counsel to the Coalition also attended numerous hearings that identified the City and One Park as the Project applicants. Therefore, the Court found that the Coalition’s claim of genuine ignorance was not persuasive.

Background

In October 2013, the Commission certified the Amendment, as proposed by the Port, as consistent with the Act. The Coalition filed a petition for writ of mandate challenging sand certification, naming the Commission and the Port. In February 2015, the City and One Park – applicants for the convention center and hotel components of the Project, respectively – intervened. The Coalition then amended its 2013 petition to name them as respondents in their response. Shortly thereafter, in June 2015, the Commission accepted the Port’s resolution adopting the Amendment.

The City and One Park then asserted a statute of limitations defense, arguing they were indispensable parties and that the Coalition failed to timely add them as real parties-in-interest within the 60-day statutory timeframe. While the trial court agreed that City and One Park were indispensable, it found that the Coalition had been genuinely ignorant of their identities. The trial court then reasoned the Coalition’s February 2015 amended complaint, which added them to the litigation, “related back” to the Coalition’s 2013 filing of its initial writ petition. The trial court “equitably tolled” the statute of limitations due to its belief that the Coalition acted in good faith in determining the identity of the Project applicants. After finding the Coalition was not time-barred, the trial court denied the Coalition’s petition on the merits, entering a judgment for the respondents.

The Coalition appealed the judgment, and the City and One Park filed a cross-appeal challenging the statute of limitations ruling. After its review, the Court of Appeal concluded that the trial court erred in rejecting the statute of limitations defense – finding the action should have been dismissed as time-barred from the onset. The Court then elected to address the Coalition’s appeal and affirmed the trial court on the merits of its petition.

As part of its decision, the Court made the following additional findings:

  • Procedural

    • The statute of limitations generally begins running, with the petitioner’s claims accruing, when the challenged decision – here, the Commission’s certification of the Amendment – becomes effective or when the formal findings supporting it are issued.[5]

    • A petitioner’s “genuine ignorance” of the developer’s identity and role is required in order to invoke Civil Code section 474’s “Doe” pleading procedure or equitable tolling to negate a statute of limitations defense when failing to name an indispensable party.

    • While the standard of review for the issue of genuine ignorance is substantial evidence, a reasonable finder of fact will not be able to make the required finding when the developer’s identity and role is disclosed in record documents and at administrative hearings.

    • Actual prejudice from a late joinder to the indispensable party developer is not required to assert a statute of limitations defense.

  • Substantive

    • CEQA and the Act require the Commission to make CEQA-related findings when approving port plan amendments where the project EIR identifies one or more significant effects on the environment.

    • The Commission is not required to consider the feasibility of environmentally superior alternatives identified in the EIR if described mitigation measures will reduce impacts to acceptable levels.

    • While the findings were not required in light of the existence of other measures effectively mitigating coastal access impacts, substantial evidence supported the Commission’s finding that a pedestrian bridge was economically (a $42 million estimated cost) and jurisdictionally infeasible.


[1] San Diego Unified Port Dist. v. Cal. Coastal Comm’n (2018) 27 Cal.App.5th 1111, 1129.

[2] The Act also requires the Commission to minimize potential conflicts between the public and beachfront property owners and resolve conflicts between the Act’s policies that are most protective of significant coastal resources.

[3]  Development activities are broadly defined by the Act to include (among others) construction of buildings, divisions of land, and activities that change the intensity of use of land or public access to coastal waters. (Pub. Res. Code § 30106).

[4] In many jurisdictions, the local government is responsible for reviewing and approving a CDP application, and the Commission will sit as an administrative appellate body if the local government’s decision is appealed. However, in a minority of jurisdictions, which includes the City, the Commission also has original permitting authority.

[5] The Court noted an exception to this general rule for Government Code § 65009(c)(1)(B)’s 90-day statute of limitations for challenges to zoning ordinances, which runs from the ordinance’s effective date.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

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About this Author

Whitney Hodges, Attorney, Sheppard Mullin, Real Estate, Natural Resources
Associate

Whitney Hodges is an associate in the Real Estate, Land Use and Natural Resources practice group in the firm's San Diego office.  She also serves on the firm's Diversity and Inclusion Committee, the Recruiting Committee, and the Latin Business Team.

Areas of Practice

Ms. Hodges's practice focuses on general business litigation with an emphasis on land use litigation, real estate litigation, business torts/contracts, intellectual property, and litigation involving internet usage.  Ms. Hodges handles all aspects of litigation, including administrative, trial...

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Rachel S. Keeney Associate Real Estate and Land Use Commercial Leasing Real Estate Acquisitions and Dispositions
Associate

Rachel S. Keeney is an associate in the Real Estate, Land Use and Environmental practice Group in the firm's San Francisco Office.

Areas of Practice

Rachel’s practice focuses on commercial and residential real estate transactions related to the acquisition, development, leasing, disposition, and financing of various types of real estate assets, including common interest developments. She has experience in all aspects of transactional real estate matters, including drafting, negotiating, and analyzing purchase and sale agreements, leases, development agreements, easements, and CC&Rs.

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